Market News: After the Bell
The close: Uh-oh
RTGAM
So much for the budding stock market rally. North American stocks returned to their losing ways on Wednesday, but with a notable difference: This particular downturn was led by commodities rather than financials.
The commodity-heavy S[amp]amp;P/TSX composite index plunged 415.33 points or 3.2 per cent, bringing the benchmark index to 12,721.37. Among the 252 stocks in the index, 85 per cent fell. It was the biggest one-day dip since the index swooned by 4.8 per cent on Jan. 21, marking what many observers still hope is the bottom of the market.
But while banks got off with a light slap, the drubbing was reserved for the former stars: Potash Corp. of Saskatchewan Inc. fell 7.7 per cent, Barrick Gold Corp. fell 6.7 per cent, Suncor Energy Inc. fell 6.1 per cent and EnCana Corp. fell 4.5 per cent.
Of course, plummeting commodity prices are at the centre of much of the volatility. Gold futures, which crossed the $1,000-an-ounce threshold just last week, fell to $944.40 an ounce in New York, down $37.84. Crude oil fell to $104.48 a barrel, down $4.94.
The Canadian dollar, which has had a tendency to track commodity prices, was also walloped. In late afternoon trading, it fell by 2.3 cents (U.S.) to 98.5 cents, its biggest one-day drop since November.
In the United States, the Dow Jones industrial average closed at 12,099.66, down 293 points or 2.4 per cent, erasing most of Tuesday's gains. There, 29 of the 30 stocks in the blue-chip index fell. Commodity producers were the biggest losers, with Alcoa Inc. falling 7.7 per cent, Chevron Corp. falling 4.9 per cent and Exxon Mobil Corp. falling 5.6 per cent.
The financials, which had been in recovery mode until the afternoon, turned south, although the losses were fairly tame. Citigroup Inc. fell 1.5 per cent and JPMorgan Chase [amp]amp; Co. fell 0.6 per cent.
Meanwhile, the broader S[amp]amp;P 500 closed at 1298.52, down 32.22 points or 2.4 per cent. Monsanto Co., which has been one of the go-to names for investors wanting exposure to the booming agriculture business, plunged 11.8 per cent, epitomizing the rush out of commodity-related investments.
"The important thing to keep in mind is that this is just one trading session," said Andrew Pyle, an investment executive at Scotia Capital. "Commodity plays are safe if funds don't start to exit en masse on the view that global growth is slowing. After what we've been through, few will wait to pull the trigger to crystallize profits and this could become a self-fulfilling prophecy for weaker commodity prices going forward."
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Copyright 2001 The Globe and Mail